New Child Support Statute, Disabled Children, and Protecting Access to Benefits

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May 15, 2017

New Child Support Statute, Disabled Children, and Protecting Access to Benefits

Posted By
O'Sullivan Law Group

The new child support statute entitled
Termination of Obligation to Pay Child Support,
N.J.S.A. 2A:17-56.67, became effective on Feb. 1. Under this statute, a child support obligation
terminates "by operation of law" when the child turns 19, which
termination can be extended until the child turns 23 under certain circumstances
and procedures. Unless another age for termination of support is present
in an order or where the child is in an out-of-home placement, the burden
is on the custodial parent to submit an application and supporting documentation
to the court seeking an extension of child support beyond the child's
19th birthday. Such a burden is nothing new, as a child reaching the age
of majority has long been "prima facie, but not conclusive, proof
of emancipation."
Llewelyn v. Shewchuk ,
440 N.J. Super. 207, 216 (App. Div. 2015). However, the statute's definitive termination of a child support
obligation upon the child's 23rd birthday is new.

An important question to be raised in conjunction with this statute is
how it will impact children with special needs. Section (e) of the new
statute provides that the court is not prevented "from converting,
due to exceptional circumstances, including, but not limited to, a mental
or physical disability, a child support obligation to another form of
financial maintenance for a child who has reached the age of 23."
As such, it would seem that the legislature simply seeks to relieve the
State's Probation Departments from the obligation to monitor and enforce
an ongoing child support obligation of a parent to a child with special
needs. By rebranding child support as "financial maintenance"
parties will be left to their own devices with regard to setting up ongoing
payment and collection of support for a child with special needs.

Of course, the issue of emancipation will remain under the purview of the
family courts as supported by the statute's legislative history, which
states "nothing in the bill would affect the authority of the court
to make judicial determinations regarding the legal emancipation of the
child." As such, courts should continue to utilize the standard set forth in
Filippone v. Lee, 304 N.J. Super.301, 308 (App. Div. 1997), wherein the essential emancipation
inquiry is whether the "child has moved 'beyond the sphere of
influence and responsibility exercised by a parent and obtains an independent
status of his or her own.'" The obligation of a parent to provide
child support "might continue indefinitely if the child were crippled
or unable to support himself."
Kruvant v. Kruvant ,
100 N.J. Super. 107, 116 (App. Div. 1968).

Indeed, the new child support statute must be reconciled with the language
set forth in
N.J.S.A. 2A:34-23, stating that a child support obligation for an unemancipated child "shall
not terminate solely on the basis of the child's age if the child
suffers from a severe mental or physical incapacity that causes the child
to be financially dependent on a parent." The support obligation
for such a child "shall continue until the court finds that the child
is relieved of the incapacity or is no longer financially dependent on
the parent."

So, if the parties agree that their child remains unemancipated or if the
court adjudicates as such, an important question arises involving how
such "financial maintenance" should be paid. So as to maximize
the child's access to governmental benefits, parties should consider
depositing money for that child into a trust. In fact, parties should
consider such a trust as soon as applicable.
N.J.S.A. 2A:34-23 even specifically provides that "the court shall consider" a
disabled child's "eligibility for public benefits and services
for people with disabilities and may make such orders, including an order
involving the creation of a trust, as are necessary to promote the well-being
of the child."

Supplemental security income (SSI), established in 42 U.S.C.A. §§1381-1385,
is a means-tested federal disability program administered by the Social
Security Administration. The amounts received by a child "are not
to be credited against the non-custodial parent's child support obligation[.]"Gifford v. Benjamin ,
383 N.J. Super. 516, 518 (App. Div. 2006). SSI differs from Social Security disability (SSDI) because SSDI is paid
out of the Social Security trust fund and is available to those who have
worked for a minimum amount of years, which is presumably not the case
for a child with special needs.

In order to qualify for SSI, the applicant must be: (1) aged 65 or older;
(2) blind; or (3) disabled.

An adult (over 18) is considered disabled for SSI purposes if they have
a "medically determinable physical or mental impairment (including
an emotional or learning problem)" which: (1) results in an inability
to perform substantial gainful activity (SGA); and (2) can be expected
to result in death
or has lasted or is expected to last for a continuous period of at least
12 months. The disability determination for a child is identical, except
that the impairment must result in marked and severe functional limitations
rather than SGA analysis. SGA is demonstrated where an applicant earns
in excess of $1,170 per month (for 2017).

In calculating the amount of SSI the applicant is to receive, the value
of the items owned must be less than $2,000 for a single person not including
the value of the person's home and typically not including the value
of the person's automobile. The current federal benefit rate (FBR)
is $735 per person; however, this amount will be reduced by the person's
"countable income," which is the amount left over after eliminating
items that are not income and applying appropriate exclusions. A person
receiving SSI can still earn a certain amount and continue to receive
SSI, but the income earned serves to decrease the amount that person will
receive in SSI. 42 U.S.C.A.§1382h. The SSI recipient's income
must fall below the SGA to continue to receive benefits.

Child support is deemed unearned income to a child for SSI purposes. SSA
POMS SI 00830.420(B)(1). This is because, in New Jersey, "child support
belongs to the child."
Pascale v. Pascale ,
140 N.J. 583, 591 (1995). Thus, "child support paid directly to a parent is considered an
asset of the child in the nature of unearned income and will disqualify
the child for government benefits."
J.B. v. W.B. ,
215 N.J. 305, 324 (2013). "Maintenance" will likely be treated in the same manner.

In order to prevent disqualification for SSI because of child support or
maintenance, parties should consider the use of a special needs trust,
which is designed to maintain eligibility for such programs.
J.B., 215 N.J. at 322. Such a trust is authorized pursuant to 42 U.S.C.A. §1396p(d)(4)(A) and
N.J.S.A. 3B:11-37. These statutes provide that the contents of the trust are not considered
resources or assets for SSI eligibility determination. The contents may
also be excluded from the disabled individual's income if certain
requirements are met, the most important of which is that "the state
must 'receive all amounts remaining in the trust upon the death'
of the trust beneficiary 'up to an amount equal to the total medical
assistance paid on behalf of the individual under a State plan.'"
J.B., 215 N.J. at 323. Additional requirements for such trusts can be found
in the implementing regulations.
See N.J.A.C.10:71–4.11(g)(1)(i)(xviii). For instance, the trust must
state that it is to solely benefit the beneficiary, be irrevocable, and
that the trust assets are for supplementation, and not to supplant, impair,
or diminish governmental benefits or assistance.

Parties may also consider a pooled trust, which is a self-settled trust
that will maintain the child's eligibility for governmental benefits
and is established and managed by a nonprofit organization instead of
the parents, grandparents or guardian. Another potential consideration
is a supplemental benefits trust, which is funded with the assets of a
third party rather than with the assets of the disabled person. Thus,
it may not be the appropriate solution for the ongoing payment of child
support or maintenance. In order to ensure that this type of trust will
not jeopardize the disabled child's access to governmental benefits,
the child must have no control or access to the trust funds.

If a person qualifies for SSI, they can also automatically receive Medicaid
and may be eligible for additional programs. Thus, the benefits of maintaining
SSI eligibility are of paramount importance for a child with special needs,
and parents must keep this issue in the forefront when determining the
manner in which child support is paid and how child maintenance after
the age of 23 will be handled.•

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**This content was written by Kory Ann Ferro of New Jersey Law Journal
on May 15, 2017.